Advanced Energy Perspectives

EPA GHG REGS: We Read the Comments, So You Don't Have To, Part 2: States

Posted by Frank Swigonski and Caitlin Marquis

Jan 5, 2015 3:57:00 PM

    

After the comment period closed on December 1, the stats were in: EPA received more than 1.6 million comments on the Clean Power Plan from individuals, organizations, and state regulatory bodies. By one estimate it would take 71 people working eight hours a day from now until June to read them all. But don't worry—our Carbon Policy Analysts identified the top comments and plowed through them. This is the second of five blog posts presenting AEE’s summary of and take on comments from a few key stakeholders: federal and state regulatory organizations, states, ISO/RTOs, utilities, and industry and environmental groups. This post covers comments from state utility commissions (PUCs and PSCs), air regulators (DEQs and DEPs), and lawmakers.

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While many states, including Washington, Minnesota, and New Hampshire, have praised the Clean Power Plan, others have raised technical and economic concerns with various aspects of the proposal, and 17 attorneys general submitted a joint comment letter outlining numerous legal objections to the Proposed Rule. AEE has not yet analyzed comments from every state. However, we have identified common themes submitted by state agencies in some key states which are watched closely by AEE. Below is a summary of comments from Arkansas, Arizona, Florida, Illinois, Michigan, Nevada, Pennsylvania, Texas and Virginia, focusing on themes found throughout comments from these and other states.

While agencies in all of these states suggested changes to the Proposed Rule, many agreed with the goals of the Clean Power Plan and applauded aspects of its methodology. In comments signed by outgoing Illinois Gov. Pat Quinn, the Illinois EPA and the Illinois Commerce Commission (ICC) voiced support of the Proposed Rule, saying “Illinois is committed to developing and implementing a state plan that achieves the required emission reductions in an economically sound and optimal manner that maintains electric system reliability.” Florida’s DEP also said it shares EPA’s goals, and Virginia’s DEQ said, “The Commonwealth of Virginia supports the promulgation of a carbon rule that achieves a meaningful reduction of CO2 emissions.” Other state agencies also commented on particular sections of the rule that they supported; for example, Michigan (joint PSC, Economic Development Corporation, and DEQ), Nevada (joint DEP, PUC, and the Governor’s Office of Energy), and Virginia DEQ all expressed a preference for the Alternate Renewable Energy Approach for calculating targets under Building Block 3, echoing comments submitted by AEE.

Several states, however, questioned the legality of the Proposed Rule, especially the inclusion of “outside-the-fence” measures in the calculation of the Best System of Emission Reduction (BSER). Some states are even challenging EPA’s authority through ongoing litigation. However, even states that are openly challenging the Proposed Rule also provided substantive technical comments. For example, while Arkansas Gov.-elect Hutchinson argued in his comment letter that EPA had overstepped its legal authority, the detailed and technical comments from Arkansas DEQ/PSC did not address the question of legality.  Similarly, in Michigan, where the AG was one of 17 who signed a joint letter questioning EPA’s authority, the state air and utility regulators did not raise legal objections to the overall rule in their joint comments. In Virginia, the SCC objected to the inclusion of “outside-the-fence” measures whereas DEQ did not. While some states had differing reactions from different state agencies, even state agencies that raised legal objections in their comments also included substantive technical comments on the Proposed Rule. This includes the Virginia SCC and both air and utility regulators in Arizona, Pennsylvania, Florida, Nevada, and Texas. Comments from other states such as Illinois accepted “outside-the-fence” measures in the Proposed Rule.

In terms of specific comments on the Proposed Rule, some states expressed concern that the calculated targets do not adequately reward states for leadership in reducing carbon emissions from the electricity system. Officials in Arizona felt that their state was not given credit for its zero-carbon energy, while air and utility regulators in Michigan, Virginia, Texas, Pennsylvania, and Florida each touted their state’s progress as a rationale for a lower target relative to other states. However, Illinois EPA/ICC embraced the targets set for the state, expressing confidence that Illinois would continue to be a leader in clean energy. State agencies in all states also provided information on state-specific circumstances, giving detailed information about individual building blocks. For example, the Arkansas DEQ/PSC gave plant-level information about the applicability of EPA’s assumptions for heat rate improvements and redispatch under Building Blocks 1 and 2.

In offering suggestions around the timing of the Proposed Rule, some officials took issue with EPA’s deadlines for state implementation plans and interim compliance deadlines. For example, Nevada’s DEP/PUC cited the state’s biennial legislative sessions and the need for multijurisdictional planning as justification for an extension on state plan submission, while further arguing that states should set their own interim goals. Similarly, the Illinois ICC/EPA and Virginia SCC and DEQ said that tight interim targets may disincentivize development of zero-carbon sources due to development lags. Officials in Arkansas, Michigan, Florida, Arizona, and Texas also expressed concerns about interim targets under the Proposed Rule.

Some states expressed concerns that the Proposed Rule would create cost and reliability challenges. The Virginia SCC as well as utility and air regulators in Michigan, Arkansas, Pennsylvania, Florida, Nevada, and Texas all said that the Proposed Rule may create cost and reliability concerns. Illinois EPA/ICC, however, said that EPA’s inclusion of renewable energy and energy efficiency will reduce the cost of compliance. Officials in Florida, Nevada, Texas, Michigan, Pennsylvania and Illinois suggested that EPA adopt a reliability safety valve (RSV), as outlined by the ISO/RTO Council, to remedy reliability issues.

Finally, states requested clarity on certain provisions of the Proposed Rule. For example, Illinois EPA/ICC echoed AEE’s comments in asking for additional guidance around issues such as out-of-state crediting for renewable energy, early crediting and accounting mechanisms for energy efficiency, and types of energy efficiency projects that will be allowed. Similarly, Michigan PSC/EDC/DEQ requested credit for energy efficiency measures already taken, and argued that out-of-state REC purchases, biomass, and incremental hydropower should all count towards compliance. Arkansas DEQ/PSC also asked for additional guidance on crediting for out-of-state renewable energy, an issue addressed in AEE’s supplemental comments (click below to download).

Download AEE's Comments

Topics: EPA GHG Regs

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